Distressed property to rise in Europe at fastest pace

The expected supply of available distressed property is expected to rise more quickly in Europe than any other world region in the first quarter of 2011, and notably in Ireland, Hungary, Germany and the UK, according to the new RICS Global Distressed Property Monitor for the fourth quarter of 2010.

The survey suggests a small fall in the level of specialist funds interest in distressed property, down from 21 countries in Q3 to 18 in Q4 2010, and a rise in distressed properties coming to market. This trend looks set to continue into Q1 2011, with property professionals in 64% of countries covered reporting an expected increase in distressed property coming to market in the three-month period.

In Q4 2010, agents in 15 countries reported a rise in levels of distressed property as compared to 13 in Q3; Australia and Germany saw the most notable up-ticks. Looking ahead to Q1 2011, distressed property listings are expected to rise at a faster pace in 40% of the countries covered.

In Q4 2010, the Ukraine experienced the most dramatic fall in the pace of investor interest, while interest rose in the Republic of Ireland, UAE and Spain. France saw the largest rise in investor interest overall, however, with net balance percents moving from 0 in Q3 2010, to +25 for this quarter.

'The prospect of more distressed property in real estate markets that are still under severe pressure will inevitably compound the squeeze on pricing,' said Simon Rubinsohn, RICS Chief Economist. 'However, in those parts of the world where commercial property is enjoying more of a recovery, the prospect of further distressed assets will have only a very limited impact. Significantly, according to our survey the level of distress expected to come to the market in Brazil, Russia and China is set to drop from what already were modest figures.'